TSX Symbol - PSD
CALGARY, Nov. 9 /CNW/ - Mr. Ken MacDonald, President and Chief Executive
Officer of Pulse Data Inc. ("Pulse" or "the Company") is pleased to report the
financial and operating results of Pulse for the three and nine months ended
September 30, 2005.
Mr. MacDonald is also pleased to announce that Pulse has declared its
tenth consecutive quarterly dividend. This dividend is $0.025 per common share
and will be paid on December 20, 2005 to shareholders of record at the close
of business on December 6, 2005. The Company's Dividend Reinvestment Plan for
eligible shareholders will be available for this dividend.
The Company has also recently amended its Dividend Reinvestment and
Optional Cash Purchase Plan whereby the minimum required purchase under the
Optional Cash Purchase program has been reduced to $200 per remittance for
eligible shareholders. Please see the Company's website at
www.pulsedatainc.com for further details.
HIGHLIGHTS
- Free cash flow(1) for the nine months ended September 30, 2005 was
$15.7 million, compared to $4.9 million in the same period in 2004.
- Based on the Company's current share price, the dividend noted above
represents an approximate yield of 4.3%.
- Seismic data library sales increased by 31% to a record level of
$22.5 million for the nine months ended September 30, 2005 compared to
$17.2 million for the nine months ended September 30, 2004.
- Pulse had a working capital position of $11.8 million at September 30,
2005 compared to a working capital deficiency of $4.2 million at
September 30, 2004.
- Pulse repaid $3.9 million of long-term debt over the nine-month period
ended September 30, 2005.
- Pulse added 2,740 net square kilometres of 3D seismic to its data
library during the first three quarters of 2005 through the purchase
of a significant seismic data set in June 2005 (2,500 net square
kilometres) and through two participation surveys (240 net square
kilometres), compared to the addition of 780 net square kilometres of
3D data for the same period in 2004.
- LiDAR segment revenue for the third quarter of 2005 was $2.5 million,
an 86% increase over $1.3 million recorded in the third quarter of
2004.
<<
Financial Highlights:
(000's except per share data)
3 months ended 9 months ended
September 30 September 30
------------ ------------
2005 2004 2005 2004
---- ---- ---- ----
(unaudited) (unaudited)
Revenue
Data library sales $ 8,614 $ 4,721 $ 22,466 $ 17,154
Participation
surveys $ 607 $ (116) $ 5,638 $ 12,259
LiDAR $ 2,453 $ 1,321 $ 6,489 $ 1,827
Trango & other $ 158 $ 213 $ 893 $ 642
Total revenue $ 11,832 $ 6,139 $ 35,486 $ 31,882
Amortization of data
libraries $ 4,627 $ 3,698 $ 14,757 $ 16,439
Net earnings $ 1,061 $ (1,590) $ 2,468 $ 2,414
Net earnings per share:
basic and diluted $ 0.02 $ (0.04) $ 0.05 $ 0.06
Funds from
operations(1) $ 9,640 $ 2,094 $ 21,157 $ 21,579
Funds from operations
per share(1):
basic $ 0.21 $ 0.05 $ 0.46 $ 0.50
diluted $ 0.20 $ 0.05 $ 0.45 $ 0.50
Free cash flow(1) $ 10,261 $ 2,393 $ 15,676 $ 4,940
Working capital
(deficiency) $ 11,804 $ (4,160) $ 11,804 $ (4,160)
Total assets $ 123,328 $ 107,133 $ 123,328 $ 107,133
Capital expenditures
Seismic data
purchases $ - $ - $ 15,225 $ -
Participation
surveys $ (621) $ (299) $ 5,481 $ 16,639
Changes to work in
progress $ 6 $ 4,113 $ 8 $ (4,253)
Property & equipment
additions $ 246 $ 313 $ 1,371 $ 349
Total capital
expenditures $ (369) $ 4,127 $ 22,085 $ 12,735
Long-term debt $ 22,303 $ 12,631 $ 22,303 $ 12,631
Shareholders' equity $ 79,167 $ 72,402 $ 79,167 $ 72,402
Weighted average
shares outstanding:
basic 46,282,828 42,966,532 46,047,366 42,981,869
diluted 47,246,570 43,307,381 46,726,355 43,409,351
Shares outstanding at
period end 46,460,354 45,585,424 46,460,354 45,585,424
(1) These non-GAAP financial measures are defined in the Financial
Summary below.
Seismic Library:
2D in net kilometres 239,820 239,013 239,820 239,013
3D in net square
kilometres 9,256 6,080 9,256 6,080
Year ended
Dec. 31
-------
2004
----
(audited)
Revenue
Data library sales $ 25,611
Participation
surveys $ 19,979
LiDAR $ 3,886
Trango & other $ 1,792
Total revenue $ 51,268
Amortization of data
libraries $ 22,862
Net earnings $ 7,719
Net earnings per share:
basic and diluted $ 0.18
Funds from
operations(1) $ 36,776
Funds from operations
per share(1):
basic $ 0.84
diluted $ 0.84
Free cash flow(1) $ 11,988
Working capital
(deficiency) $ 3,845
Total assets $ 108,426
Capital expenditures
Seismic data
purchases $ 1,295
Participation
surveys $ 24,788
Changes to work in
progress $ (8,436)
Property & equipment
additions $ 574
Total capital
expenditures $ 18,221
Long-term debt $ 11,203
Shareholders' equity $ 77,507
Weighted average
shares outstanding:
basic 43,646,866
diluted 43,990,061
Shares outstanding at
period end 45,774,816
(1) These non-GAAP financial measures are defined in the Financial
Summary below.
Seismic Library:
2D in net kilometres 239,288
3D in net square
kilometres 6,522
FINANCIAL SUMMARY
The Company's continuous disclosure documents provide discussion and
analysis of "free cash flow", "funds from operations" and "funds from
operations per share". These financial measures do not have standard
definitions prescribed by generally accepted accounting principles in Canada
(GAAP) and therefore they may not be comparable to similar measures disclosed
by other companies. The Company has included these non-GAAP financial measures
because they are used by management, investors, analysts and others as
measures of the Company's financial performance. The Company's definition of
free cash flow is cash available for debt servicing, discretionary capital
expenditures and the payment of dividends, and is calculated as funds from
operations less participation survey additions to the data library. The
Company's definition of funds from operations is cash flow from operations as
prescribed by Canadian generally accepted accounting principles, but excluding
the impact of changes in non-cash working capital. Funds from operations per
share is defined as funds from operations divided by the weighted average
number of shares outstanding for the period.
Overview
Net earnings for the nine months ended September 30, 2005 were
$2.5 million ($0.05 per share diluted), compared to $2.4 million ($0.06 per
share diluted) for the same period in 2004. Funds from operations for the
first nine months of 2005 were $21.2 million ($0.45 per share diluted),
compared to $21.6 million ($0.50 per share diluted) generated for the same
period in 2004. These per share figures are based on the weighted average
diluted shares outstanding of 46,726,355 for the first nine months of 2005,
compared to 43,409,351 for the comparative period in 2004.
Net earnings for the three-month period ended September 30, 2005 were
$1.1 million ($0.02 per share diluted) compared to a loss of $1.6 million
($0.04 per share diluted) for the same period in 2004. Funds from operations
for the third quarter of 2005 of $9.6 million ($0.20 per share diluted) were
360.4% higher than the $2.1 million ($0.05 per share diluted) generated in the
third quarter of 2004. These per share figures are based on the weighted
average diluted shares outstanding of 47,246,570 for the third quarter of 2005
compared to 43,307,381 for the third quarter of 2004.
On June 15, 2005 Pulse successfully completed the acquisition of a
significant seismic data base which has increased the Company's 3D data
library by 40%. The acquisition consists of approximately 2,500 net square
kilometres of 3D seismic data and 500 net kilometres of 2D seismic data and is
located in the south-central area of Alberta. This valuable addition is
complementary to Pulse's existing database and is located in an area that has
recently seen a significant increase in exploration activity by oil and gas
companies. The purchase price of $15.2 million was principally financed by
term debt through Pulse's existing debt provider. The effective date of the
transaction was May 2, 2005.
Revenue
Stated in thousands of dollars
(In 2004, the LiDAR segment includes revenues from May 26 to
September 30)
-------------------------------------------------------------------------
For the nine months ended September 30
------------------------------------------------------
Business Segment 2005 2004
--------------------------------------------
% of % of
Total Total
Revenue Revenue Revenue Revenue % Change
-------------------------------------------------------------------------
Seismic revenue:
-------------------------------------------------------------------------
Data library
sales $ 22,466 63.3 $ 17,154 53.8 31.0
-------------------------------------------------------------------------
Participation
surveys 5,638 15.9 12,259 38.5 (54.0)
-------------------------------------------------------------------------
LiDAR revenue 6,489 18.3 1,827 5.7 255.2
-------------------------------------------------------------------------
Trango revenue 1,065 3.0 617 1.9 72.6
-------------------------------------------------------------------------
Corporate and other (172) (0.5) 25 0.1 (788.0)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total $ 35,486 100 $ 31,822 100 11.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the three months ended September 30
------------------------------------------------------
Business Segment 2005 2004
--------------------------------------------
% of % of
Total Total
Revenue Revenue Revenue Revenue % Change
-------------------------------------------------------------------------
Seismic revenue
-------------------------------------------------------------------------
Data library
sales $ 8,614 72.8 $ 4,721 76.9 82.5
-------------------------------------------------------------------------
Participation
surveys 607 5.1 (116) (1.9) 623.3
-------------------------------------------------------------------------
LiDAR revenue 2,453 20.7 1,321 21.5 85.7
-------------------------------------------------------------------------
Trango revenue 203 1.7 266 4.3 (23.7)
-------------------------------------------------------------------------
Corporate and other (45) (0.3) (53) (0.8) 15.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total $ 11,832 100 $ 6,139 100 92.7
-------------------------------------------------------------------------
Seismic Data Segment
--------------------
The seismic data segment, which includes data library sales and
participation survey revenue, contributed 79.2% of total revenue for the
Company in the first nine months of 2005, and 77.9% of total revenue for the
third quarter of the current year. With the Terrapoint acquisition being
effective May 26, 2004 the seismic data segment contributed 92.3% of total
revenue for the nine-month period ended September 30, 2004 and 75.0% of total
revenue for the third quarter.
Within the seismic data segment the Company generates two types of
revenue: data library sales and participation survey revenue. While
participation survey revenue increases total revenues and earnings
significantly in periods of high survey activity, participation surveys
represent an investment in the seismic data library that initially draws down
the capital resources of the Company. Data library sales generate immediate
free cash flow through licenses of seismic data from Pulse's existing seismic
data library, which can occur many times over without further costs being
incurred.
Seismic data segment revenue for the nine months ended September 30, 2005
reflects an overall decrease of 4.4% from the comparable nine-month period in
2004, but includes a 31.0% increase in data library sales for the same period,
and an 82.5% increase in data library sales for the third quarter of 2005
compared to the third quarter of 2004. The primary reason for the decrease in
total seismic data segment revenue was that Pulse recorded $5.6 million of
participation survey revenue in the first three quarters of 2005, compared to
$12.3 million of participation survey revenue in the first three quarters of
2004. The 2004 period had a higher than normal level of participation surveys
delivered.
The Company's decision to add to its data library in 2005 by purchasing
seismic data rather than conducting extensive participation surveys has
resulted in lower total seismic segment revenue, but has resulted in a more
substantial increase in data added to the seismic library. Pulse added
2,740 net square kilometres of 3D seismic to its library during the first nine
months of 2005, compared to 780 net square kilometres of 3D added during the
same period in 2004.
LiDAR Segment
-------------
LiDAR revenue for the third quarter of 2005 increased 85.7% to
$2.5 million over the third quarter of 2004 revenue of $1.3 million, to reach
a year-to-date total revenue of $6.5 million. It is not relevant to make
comparisons to the nine-month period ended September 30, 2004, as the
acquisition of the LiDAR business occurred May 26, 2004. The increased third
quarter sales were attributable to an increased marketing effort and
improvements in operational efficiencies and processes since the acquisition
of the LiDAR companies in 2004.
Trango Segment
--------------
Revenue for the first nine months of 2005 increased 72.6% to $1.1 million
in 2005 from $617,000 in 2004. For the third quarter of 2005, revenue
decreased 23.7% to $203,000 from the $266,000 generated in the third quarter
of 2004. These improved results in the year to date for 2005 are mainly the
result of work completed on major contracts awarded to Trango by three oil and
gas companies in the United States in late 2004.
Data Library
Pulse acquires seismic data to grow its data library through two primary
methods. The Company conducts participation surveys each year, and also makes
data purchases when the opportunity arises to acquire the proprietary rights
to complementary seismic data. During the first nine months of 2005 Pulse
invested $20.7 million to acquire new seismic data. In the second quarter of
2005 the Company purchased the proprietary rights to approximately 2,500 net
square kilometres of 3D seismic data and 500 net kilometres of 2D seismic
data, located in the south-central area of Alberta, for $15.2 million.
Additionally, in the first nine months of 2005 the Company invested
$5.5 million to acquire new data through participation surveys. In comparison,
the Company spent $8.2 million on participation surveys during the first nine
months of 2004. This amount was in addition to $8.4 million that was recorded
at December 31, 2003 as work in progress, relating to the participation survey
programs completed in the first quarter of 2004, which was converted to data
library additions in 2004 with the delivery of the data in February and
March 2004.
In 2005, Pulse has added 2,740 net square kilometres of 3D data to its
library, compared to 780 net square kilometres of 3D data during the
comparable period in 2004.
Liquidity, Capital Resources and Capital Requirements
The working capital position of Pulse, including the current portion of
long-term debt of $6.1 million, at September 30, 2005 was $11.8 million,
compared to $3.8 million at December 31, 2004 and a deficiency of $4.2 million
at September 30, 2004. The working capital position has improved by 210.5%
compared to the December 31, 2004 position as a result of increased accounts
receivable relating to the high level of seismic data library sales and LiDAR
sales achieved in the third quarter, as well as the decrease in accounts
payable. The accounts payable balance was low due to the fact that the
upcoming fall/winter participation programs had just begun and a low level of
costs had been incurred as of September 30, 2005. All working capital
covenants with Pulse's lenders have been met throughout each of these periods.
With the continuation of the trend of very strong existing seismic data
sales levels, and significantly improved operational procedures and cost
structures combined with a solid contract backlog position in Terrapoint and
Trango, Pulse management expects that its funds from operations will be
sufficient to finance operations, debt servicing, dividends and budgeted
capital expenditures for the remainder of 2005. The seismic data library is
continually growing with the acquisition of new, principally 3D data through
participation surveys, and with the purchase of high-quality seismic data. The
ongoing growth in the Company's seismic data library continues to enable Pulse
to provide valuable seismic data to industry participants into the future.
Historical data sales analysis shows that most seismic data retains its value
for many years, and with the technological advancements in reprocessing that
have been made in recent years, the Company's clients are able to enhance the
quality of older data in the library. With the acquisition of Terrapoint,
Pulse has added airborne and ground-based LiDAR services to its product
offerings, and has begun accessing customers in new industries and markets. As
well Trango has demonstrated an ability to develop new products and penetrate
new markets in the United States.
Pulse also has a $10 million operating line of credit facility with
Scotiabank. Any drawdowns on this facility are repayable on demand and bear
interest at the bank's prime lending rate plus 0.25%. This facility was not
utilized throughout 2002, 2003, 2004 and we do not anticipate using it in
2005.
PULSE DATA INC.
Interim Consolidated Balance Sheets
(In thousands of dollars)
-------------------------------------------------------------------------
September 30, December 31,
2005 2004
-------------------------------------------------------------------------
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 7,473 $ 3,827
Accounts receivable 16,067 12,832
Prepaid expenses 1,138 234
Work in progress 1,554 693
-------------------------------------------------------------------------
26,232 17,586
Data libraries 80,967 75,010
Property and equipment 14,410 15,042
Long-term receivable 1,100 -
Investments 432 667
Deferred charges 187 121
-------------------------------------------------------------------------
$ 123,328 $ 108,426
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 2,432 $ 4,466
Deferred revenue 5,905 3,613
Current portion of long-term debt 6,091 5,662
-------------------------------------------------------------------------
14,428 13,741
Long-term debt 22,303 11,203
Future income taxes 7,430 5,975
Shareholders' equity:
Share capital 51,615 50,531
Contributed surplus 865 449
Retained earnings 26,687 26,527
-------------------------------------------------------------------------
79,167 77,507
-------------------------------------------------------------------------
$ 123,328 $ 108,426
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PULSE DATA INC.
Interim Consolidated Statements of Earnings and Retained Earnings
(In thousands of dollars, except per share data)
-------------------------------------------------------------------------
Three months Nine months
ended September 30 ended September 30
----------------------- -----------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
(unaudited) (unaudited)
Revenue $ 11,832 $ 6,139 $ 35,486 $ 31,882
Operating expenses:
Amortization of data
libraries 4,627 3,698 14,757 16,439
Operating 2,606 3,096 8,327 5,570
Depreciation and
amortization 765 696 2,003 1,101
-------------------------------------------------------------------------
7,998 7,490 25,087 23,110
-------------------------------------------------------------------------
Gross margin 3,834 (1,351) 10,399 8,772
General and
administrative expenses 1,447 687 4,724 2,873
Research and development
expenses 323 - 836 -
Interest:
Long-term debt 408 236 878 791
Other (18) (8) (81) 267
-------------------------------------------------------------------------
390 228 797 1,058
-------------------------------------------------------------------------
Earnings (loss) before
income taxes 1,674 (2,266) 4,042 4,841
Income taxes:
Current (recovery) (2,511) 53 119 926
Future (reduction) 3,124 (729) 1,455 1,501
-------------------------------------------------------------------------
613 (676) 1,574 2,427
Net earnings (loss) $ 1,061 $ (1,590) $ 2,468 $ 2,414
Retained earnings,
beginning of the
period 26,784 23,952 26,527 21,027
Dividend paid (1158) (568) (2,308) (1,647)
-------------------------------------------------------------------------
Retained earnings,
end of the period $ 26,687 $ 21,794 $ 26,687 $ 21,794
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per
share, basic and
diluted $ 0.02 $ (0.04) $ 0.05 $ 0.06
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PULSE DATA INC.
Interim Consolidated Statements of Cash Flows
(In thousands of dollars)
-------------------------------------------------------------------------
Three months Nine months
ended September 30 ended September 30
----------------------- -----------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
(Unaudited) (Unaudited)
Cash provided by (used in):
Operations:
Net earnings $ 1,061 $ (1,590) $ 2,468 $ 2,414
Items not involving cash:
Amortization of data
libraries 4,627 3,698 14,757 16,439
Depreciation and
amortization 765 696 2,003 1,101
Unrealized loss (gain)
on foreign exchange (151) (149) (87) (149)
Future income taxes
(reduction) 3,124 (729) 1,455 1,501
Stock-based
compensation 204 161 561 253
Other 10 7 - 20
-------------------------------------------------------------------------
Funds from operations 9,640 2,094 21,157 21,579
Net change in non-cash
working capital items
related to operations (4,983) 5,059 (4,982) (1,588)
Increase (decrease) in
non-current deferred
revenue (250) (269) - (324)
-------------------------------------------------------------------------
4,407 6,884 16,175 19,667
Financing:
Long-term debt - - 15,439 -
Repayment of long-term
debt (1,081) (1,267) (3,910) (3,401)
Issue of share capital 381 18 939 610
Dividends paid (1,158) (568) (2,308) (1,647)
-------------------------------------------------------------------------
(1,858) (1,817) 10,160 (4,438)
Investing:
Additions to data
libraries through
participation surveys 621 299 (5,481) (16,639)
Seismic data purchases - - (15,225) -
(Increase) decrease in
participation surveys
in progress (6) (4,113) (8) 4,253
Decrease in investments - - 235 285
Additions to property
and equipment (246) (313) (1,371) (349)
Business acquisition - - - (2,142)
Net change in non-cash
working capital items
related to investing 572 1,685 (839) (5,481)
-------------------------------------------------------------------------
941 (2,442) (22,689) (20,073)
-------------------------------------------------------------------------
Increase (decrease) in
cash position 3,490 2,625 3,646 (4,844)
Cash and cash equivalents,
beginning of period 3,983 1,549 3,827 9,018
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 7,473 $ 4,174 $ 7,473 $ 4,174
-------------------------------------------------------------------------
During the three and nine month periods ended September 30, 2005 the
Corporation paid interest of $ 384,000 (2004-$241,000) and $ 774,000
(2004-$987,000), respectively. During the three and nine month periods
ended September 30, 2005 the Corporation paid income taxes of $ 44,700
(2004-($1,324,000)) and $ 140,400 (2004-$1,069,000), respectively.
OUTLOOK
Continuing strong commodity prices have sustained a high level of oil and
gas exploration activity by Canadian energy companies leading to a strong
demand for seismic data.
Management and employees are committed and focused on continuing to
implement operational efficiencies in Terrapoint. By leveraging off the
initial improvements achieved during the second and third quarters of 2005,
combined with a solid contract backlog position and the execution of further
operational initiatives, the LiDAR segment is expected to contribute total
revenue of $9 million for 2005.
Trango has made steady progress penetrating the United States market
place and has added several new products to its offering which are expected to
add positive financial results in the future.
The Company is projecting total seismic data sales for 2005 of
$30 million, which will generate a consolidated free cash flow target of
$18 million for the year. These projections are based on the fourth quarter
historically being a strong quarter for data sales from the seismic library,
the completion and delivery by year end of two participation surveys that are
currently in progress and Terrapoint achieving projected LiDAR revenues for
the fourth quarter of 2005.
By continuing to focus on its core business, Pulse remains focused on
increasing its quality seismic data library and generating a solid level of
free cash flow in the years ahead.
CORPORATE PROFILE
Pulse is a Calgary-based international company specializing in data
ownership through acquisition, marketing and information management, with a
current focus on the energy sector. Through its three operating segments,
Pulse Seismic, Terrapoint and Trango, the Company has evolved into an industry
leader in providing better information faster.
Pulse Seismic is at the forefront with regard to acquiring, marketing and
licensing seismic data in Western Canada. Pulse Seismic's library currently
consists of approximately 240,000 net kilometres of 2D data and more than
9,200 net square kilometres of 3D data. Revenue is generated through licensing
of the data library and through the licensing of participation surveys.
With offices in Calgary, Ottawa and Houston, Terrapoint is the largest
and most experienced LiDAR (Light Detection And Ranging) data provider in the
world. LiDAR data is used to produce survey-quality 3D digital elevation
models. The use of digital elevation data significantly reduces the cost of
project planning and design in a broad array of industries including urban
planning, transportation and industrial and resource planning and development.
Since its inception in 1998, Terrapoint has worked in many countries around
the world providing cost-effective solutions to its clients' needs.
Trango has developed an exceptional reputation for providing GIS data
management products and services to the North American oil and gas industry.
Trango provides the technology that allows clients to better exploit their
seismic, well, geologic and related data.
Pulse operates prudently using a disciplined approach that capitalizes on
its strong financial base, which in turn has provided a solid foundation for
growth. By incorporating synergistic products and services into the company
mix, Pulse has positioned itself for continued expansion and diversification
in market areas that require better information faster.
Pulse trades on the Toronto Stock Exchange under the symbol PSD.
Certain information contained herein may constitute forward-looking
statements under applicable securities laws. Such statements are subject to
known or unknown risks and uncertainties that may cause actual results to
differ materially from those anticipated or implied in the forward-looking
statements.
Investors are encouraged to review the "Risk Factors" section of the
Management's Discussion and Analysis in the Company's Annual Report for 2004
and 2005 Interim Reports for a discussion of risks that could affect the
Company's operations and financial results. Forward-looking statements are
based upon management's assumptions, expectations and estimates at the time
that such statements are made. Pulse does not update forward-looking
statements should circumstances change or management's assumptions,
expectations or expectations change.
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